Barrington Ups Career Education to 'Market Perform'
Barrington Research upgraded Career Education (CECO ) to market perform.
Analyst Alexander Paris says he upgraded from underperform on valuation after the shares dropped 28% on Wednesday amid more allegations of record-keeping issues. A former registrar at the Brooks Institute of Photography, said Career Ed inflated enrollment to boost profits.
Paris says investors connected the dots between these allegations and the recent lawsuit of a similar nature brought by a Gibbs College employee, and assumed a systemic problem exists. (Both colleges are units of Career Education.) However, Paris says this isn't the case; he has high confidence in Career Ed's management and its control system. He thinks the company has great growth prospects in an attractive industry.
Career Ed said early Thursday that "contrary to media reports, no specific allegations of accounting irregularities were made by the former employee." He notes Career Ed will retain an outside organization to further improve controls Paris sees $1.14 2003 earnings per share, and $1.42 for 2004.